Imposition of MIP pushes pepper prices up 10-12%

December 13
03:28 2017

After the announcement of minimum import price (MIP) for pepper, the price in the domestic market has risen by 10-12 per cent to Rs 420 per kg.

It may be noted that the price crashed to Rs 380 from Rs 600-650 per kg last year due to imports.

Last week the commerce ministry approved the Spices Board’s proposal for fixing pepper’s CIF (cost, insurance, freight) value of Rs 500 per kg as MIP to protect the interests of pepper-growers.

“In recent times, a decline in the domestic pepper price due to cheaper imports from other countries has been a major concern among pepper-growers. Pepper prices have gone down by nearly 35 per cent in one year and have resulted in a lot of hardship for pepper-growers,” said a commerce ministry official.

The pepper price dropped from about Rs 600 a kg to about Rs 380 for kg even though the quality of the pepper imported was assumed to be inferior, said Rohan Colaco, former executive committee member, KPA, and a major grower in the Karnataka region.

The good income from pepper has cushioned the blow of low prices of coffee. But with pepper prices crashing by 50 per cent, the future looked bleak, said a farmer from Kerala.

It put a lot of pressure on growers, says Colaco, adding that farmers had, seeing this trend, held back on sales of black pepper and were looking at prices at around Rs 600 a kg for now and the next harvest, which is approaching.

With no stakeholder keen on releasing stocks, the market is looking very lucrative for sellers, says Colaco.

India’s domestic demand for pepper is increasing at around four per cent per annum. Currently the demand is estimated at 60,000 tonnes a year.

So far around 14,000 tonnes of pepper has been imported this year and almost 50 per cent (7,000 tonnes) of that is from Vietnam.

The duty on spices import to India from Sri Lanka is around 8.5 per cent while the same to Nepal is free under the SAFTA (South Asian Free Trade Area) agreement.

India had entered into an import agreement with Sri Lanka for 2,500 tonnes of pepper per year, taking advantage of the low duty structure.

Since most of the pepper-producing countries are in the Association of Southeast Asian Nations, there have been apprehensions of pepper being routed from countries in this region through Sri Lanka, taking advantage of the lower duty under SAFTA and India Sri Lanka Free Trade Agreement, for availing of the concessional import duty.

Projected pepper production in Vietnam in the coming season has been estimated at 170,000-190,000 tonnes while that of India 65,000-70,000 tonnes, according to market experts.

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